In our last article earlier this week, we touched some of the prominent decentralized financial (DeFi) applications within the exchange and lending space. In summary, DeFi applications such as Maker and Uniswap leverage decentralized, permissionless networks to provide any individual with an opportunity to lend, borrow or exchange digital assets.
Over the past few months, DeFi has grown increasingly more complex as new applications are pushing the envelope on Ethereum’s programmable SoV (store of value) narrative. In this particular article, we’ll be focusing on a few more abstract, yet extremely thought-provoking applications surrounding derivatives and new forms of tokenized assets.Derivatives dYdX
dYdX provides a mechanism to trade derivatives on Ethereum. Margin trading, derivatives and other financial products are crucial for the maturity of DeFi as access to these powerful financial products is currently limited across the globe. Investors can now leverage dYdX to access new assets to expand their ability to deploy new trading strategies, take on additional risk through margin trading, and manage risk through lending, ultimately leading to more desirable capital allocations.
In May 2019, dYdX released an open source protocol called Solo which allows users to lend, borrow, or margin trade ETH, Dai, and USDC along with future support other popular Ethereum-based assets. Similar to Dharma and Uniswap, dYdX is untokenized and does not have a native token.
Since the release of Solo in May, dYdX has experienced explosive success with TVL increasing from $1.1M to a peak of $8.9M (+709%) in just the span of two months.Synthetix
Another derivatives platform on Ethereum, Synthetix has created Synths which are on-chain synthetic assets which track the value of real world assets. As of writing, Synthetix supports over 20 Synths which include a wide-range of assets including gold, stocks, crypto, and other fiat currencies such...